Hello there! Welcome to our overview of the recent Budget announcement by Jeremy Hunt. We're excited to delve into the key highlights and explore how they might affect you, whether you're an individual looking to make sense of changes in tax incentives or a business owner curious about new opportunities. As dental accountants, we understand the importance of staying informed about financial changes that could impact your practice and your clients. The Budget isn't just about numbers; it's about shaping the landscape of our everyday lives and businesses. So, grab a cuppa and let's embark on this journey together to uncover the insights and implications of the Budget 2024.
Taxation
National Insurance, the payroll tax, will see a 2p cut in the pound for both employees and the self-employed. This will provide some relief for many workers across the country.
The salary thresholds for paying income tax and national insurance will remain frozen. As a result, individuals will be subject to higher taxes as their incomes increase. This phenomenon, known as fiscal drag, may impact your earnings.
The current Non-Dom Tax regime, which applies to UK residents with a permanent home overseas, will be replaced with new rules starting from April 2025.
The government plans to introduce a £5,000 UK ISA (Individual Savings Accounts) tax allowance specifically for savers investing in "UK-focused" shares. More details about this scheme will be provided after a consultation.
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Benefits and Income Support
Full child benefits will now be paid to households where the highest-earning parent earns up to £60,000, an increase from the previous limit of £50,000. This change aims to provide additional support to families.
Partial child benefit payments will be available for households where the highest earner earns up to £80,000. This adjustment offers assistance to a broader range of families.
Individuals receiving benefits and taking out emergency budgeting loans from the government will benefit from a longer repayment period. This change aims to alleviate financial stress for those in need.
The government will continue to support individuals struggling with the cost of living by extending the existing fund for another six months.
The administration fee of £90 to obtain a debt relief order will be scrapped, allowing individuals facing financial difficulties to access help more easily.
Cigarettes, Vapes, and Alcohol
The freeze on alcohol duty, which was originally due to end in August, will continue until February 2025.
Starting from October 2026, a new tax will be implemented on vaping products, with the tax rates linked to their nicotine levels. This measure aims to regulate the industry effectively.
To ensure parity with the new tax on vaping products, tobacco duty will increase by £2.00 per 100 cigarettes at the same time.
Transport and Energy
Fuel duty will remain frozen, and the 5p cut in fuel duty on petrol and diesel, which was set to expire this month, will now be extended for another year.
An extension of the "windfall" tax on energy firms' profits until 2029 aims to ensure a fair contribution toward public finances.
Business class air passenger duty, the tax paid on flights, will be increased to generate additional revenue for the government.
The UK government is set to acquire the site of the planned Wylfa nuclear site in north Wales, with a £160 million deal in place.
Additionally, a government fund dedicated to investing in green energy projects will receive an infusion of £120 million.
Housing
The higher rate of tax paid on profits from the sale of properties will be reduced from 28% to 24%. This change is expected to encourage property investment and stimulate the real estate market.
Tax breaks for owners of holiday let properties will be scrapped, impacting the tax benefits previously associated with these types of investments.
The temporary stamp duty tax break, applicable when purchasing multiple properties in England or Northern Ireland, will come to an end in June.
Public Debt, Inflation, and the Economy
The Office for Budget Responsibility predicts a modest UK economic growth of 0.8% for this year, followed by a 1.9% growth rate next year. Forecasts also indicate growth rates of 2% in 2026, 1.8% in 2027, and 1.7% in 2028.
The inflation rate is expected to fall below the 2% target by the end of June and reach 1.5% next year.
Public debt, excluding Bank of England debt, is forecasted to be 91.7% of GDP this year, rising slightly to 92.8% next year.
Overall day-to-day government spending is projected to grow by 1% in real terms over the next five years.
The NHS (National Health Service) budget will receive a £2.5 billion increase next year, while an additional £3.4 billion will be invested in the service up to 2030, with the goal of improving productivity.
Business and Investment
The threshold at which small businesses must register to pay VAT will be raised from £85,000 to £90,000 starting in April, providing relief for many small enterprises.
The Covid-era government loan scheme, created to support small businesses, will be extended until March 2026, ensuring continued financial support during these challenging times.
Tax reliefs for touring and orchestral productions, originally due to expire in March 2025, will now be made permanent, supporting the arts and culture industries.
Other Measures
The construction of a memorial to honour Muslims who fought for Britain during World War One and Two will receive £1 million in funding.
A new tax credit will be introduced to support independent UK films with a budget of less than £15 million, providing additional resources to the film industry.
In conclusion, the Budget 2024 introduces pivotal measures that shape the financial landscape for individuals and businesses alike. At PKPI Chartered Accountants, we are committed to helping you navigate these changes and seize opportunities that arise. Our team of experts is here to provide tailored advice and support, ensuring that you make informed decisions for your financial well-being. If you have any questions or would like further information on how these measures may impact your specific situation, please feel free to contact us.
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